IMPACT OF UNIVERSAL BANKING ON THE INSURANCE INDUSTRY; A CASE STUDY OF SELECTED INSURANCE COMPANIES IN NIGERIA

ABSTRACT

Sometimes in 1999, some sector of the Banking Industry began to advocate the adoption of Universal Banking (UB). As the argument for and against the introduction ranged on in conferences and workshops, the CBN had to succumb to the pressure from the proponents of Universal Banking by giving approval for the introduction of Universal Banking. Fears have been expressed over the introductions of Universal Banking. These fears appear to be harboured by insurance who hold the notion that Banks are only coming to disturb their seemingly exclusive business. Some people, including the insurance experts have however, dismissed these fears, stressing that the phenomenon would rather boost Insurance business and make the practitioners sit up for real competitive insurance marketing and sales. In the light of the above, this research work seek to look at the Impact of Universal Banking on the Insurance Industry. To identify the problem that could arise there from and to proffer solutions to the problem. Universal Banking is a multi-purpose banking which removes the restrictions between commercial banking merchant banking, and insurance market such that a banking institution can offer integrated financial services in one stop centre. The principal research instrument used is the questionnaire. The case study is the first ten insurance companies on the rating of the Nigeria Reinsurance Corporation of Insurance Companies in Nigeria, based on their asset base. The study population consists of the management and senior staff of the case study. Ten questionnaires were given to each of the case study making it a total population of 100 workers. Since the total population is known we used Bourley’s formular to determine the sample size of 80. The data were analysed using likert scale statistical model. The hypotheses were tested using Z-score test. The result showed that Universal Banking will have tremendous positive impact on the insurance industry. It is strongly believed that the introduction of Universal Banking is good to the bettered image of insurance industry in Nigeria. Universal Banking will improve the service delivery in the insurance industry. The banks are popular, with banks transacting insurance business the insuring public will be rest assured of the settlement of their claims. The work equally showed that the long standing insurance unawareness in the country will be broken down by Universal Banking and Insurers will stand to gain more clients.

CHAPTER ONE
INTRODUCTION
1.1      Background of the study
In choosing any project, there must be the consideration of several factors, the most prominent of which should be the end-user value. The need should have arisen for the user to look out for an external help, such need could be a more reliable and comprehensive information concerning Universal Banking system.

Ever since creation, there has been a continuous quest for man to improve his well being through his relations to the problems and challenges posed by his environment. Tools upon tools have been fashioned and defined by man to aid him in conquering these problems and challenges posed by his over crowded and pressurized work and leisure environment.


In the developed countries of the world, the Universal Banking system has been operating for almost a decade now. In Nigeria, it is a new innovation in the Banking and Insurance industries. Since January 1, 2001 when the central Bank of Nigeria approved the “Financial Supermarket” system, merchant bankers who fought and won the battle may have started counting their chicks even before they are hatched. And it is expected that their fortunes will be enhanced soon after. Proprietors of merchant banks had complained that the unequal playing field in the banking industry which had, over the years, tilted in favour of the Commercial Banks had been responsible for continued poor performance of their outfit. This is even so when it is on record that some merchant banks post a lot more profit than the commercial banks.

The news of Universal Banking ha caused some uneasiness in some quarters, notably, the Insurance industry. Although the proponents of government policies and the promoters of universal banking have assured the insurance industry that they have nothing to worry about. However, it does not really accord with sound reasoning that the insurance industry will remain the same after the introduction of Universal Banking (Nwite 2004).

The full impact of Universal Banking on insurance remains a matter of conjecture since the policy has just been newly introduced in Nigeria. Scarcity of detailed information on Universal Banking has not really helped matters. However, a report on universal banking has to do with the dismantling of functional barriers in the financial service delivery thereby granting each bank the right to decide to engage in any financial service from a wide range of service such as accepting deposit, lending, trading in financial instruments, foreign exchange transactions, underwriting of debts, equity issues brokerage, investment management and insurance. In order words, a bank can be a jack of all trade (financial services) whatever effect this will have on the banking industry is up to bankers to appraise. What bothers the researcher and warranted this write up is the need for us to be told what impact Universal Banking will have on the insurance profession and industry.

Take the often recycled arguments that are anchored on banks increased capital base for insurance. It has often been said that Universal Banking is the only way by which the huge capital investment of the banks could be justified. This will make sense if we fail to remember that the N500m capital base was considered the minimum for a bank to carry out the present functions they are performing. It was felt that the capital base of the banks were too small in comparison to the total deposits that they receive from the public. But now that they have increased their capital base to N25b it will no longer form a negligible ratio of the total deposit that they receive from the members of the public. The current capital base is the minimum they should hold to carry on with their present specialist banking services. Bankers have boasted that their huge capital base will boost public confidence in insurance. No insurance literate person will wait for bankers to engage in insurance before having confidence in the efficacy of insurance products.....

For more Banking & Finance Projects click here
================================================================
Item Type: Postgraduate Material  |  Attribute: 113 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
================================================================

Share:

No comments:

Post a Comment

See full list of FREE Project Topics under your Department Here!

Featured Post

Reporting and discussing your findings

This page deals with the central part of the thesis, where you present the data that forms the basis of your investigation, shaped by the...

Followers

Popular Posts